Crypto-backed loans rose to a record $73.6 billion in the third quarter, marking the sector’s most leveraged quarter on record, but the composition of that leverage looks significantly healthier than in the 2021-2022 cycle.
According to Galaxy Research, the sharp increase was overwhelmingly driven by onchain lending, which now represents 66.9% of all crypto-backed debt, up from 48.6% at the previous peak four years ago.
DeFi lending alone surged 55% to a record $41 billion, supported by points-driven user incentives and improved collateral types such as Pendle Principal Tokens.
Centralized lenders also saw a rebound, with loans growing 37% to $24.4 billion, although the market remains a third smaller than its 2022 peak.
Survivors of the last cycle have largely abandoned unsecured loans and turned to fully collateralized models as they seek institutional capital or public IPOs. Tether remains the dominant CeFi lender with nearly 60% of tracked loans.
The quarter also saw a decisive shift within DeFi itself, with lending apps now capturing more than 80% of the onchain market and CDP-backed stablecoins shrinking to 16%. New chain implementations, including Aave and Fluid on Plasma, helped fuel activity, with Plasma attracting more than $3 billion in loans within five weeks of launch.
It is worth noting that shortly after the end of 3. quarter, a leverage-induced wipeout occurred, resulting in more than $19 billion in liquidations, the largest single-day cascade in crypto futures history.
Still, Galaxy’s report argues that the liquidation event did not reflect systemic credit weakness: Most positions were mechanically removed when exchanges’ automatic deleveraging systems kicked in.
Meanwhile, corporate digital-asset treasury (DAT) strategies continue to rely on leverage, with more than $12 billion in outstanding debt tied to crypto-acquiring firms. Total industrial debt, including DAT issuance, hit a record $86.3 billion.
The data suggests that crypto leverage is rising again, but on a firmer, more transparent basis, with collateralized structures replacing the opaque, unbacked credit that fueled the last boom-and-bust cycle.
